In recent years, Canada’s forest industry has undergone an especially deep cyclical decline, coupled with structural changes in world markets. “Our biggest issue is liquidity – managing increased operating costs, working through falling prices and markets, and making our credit payments.”, In his remarks, Nighbor said he sees no evidence that the credit availability program, run through the federal Business Development Bank of Canada, “is going to deliver what we need.”. Companies have been running lean and mean for a long time. It seems barely a day goes by without an announcement about layoffs, temporary closures or permanent mill shut downs in British Columbia's struggling forest industry. Wood is increasingly gaining favour as a renewable construction material of choice. In March, Ottawa introduced a 75 per cent federal wage subsidy, designed to soften the blow to employers caused by the pandemic. Daily updates on what's happening in BC's business world. Take advantage of it.” Doing business in the forest industry’s “new era” means knowing the lessons learned from tough times, he said. Forest sector transformation. The British Columbia forest industry continuously faces challenges from commodity market volatility, increased global competition, and declining timber supply. All Rights Reserved, UBC professor Harry Nelson addresses the Truck Loggers Association. Population growth statistics paint a rosy future for the construction industry. Canada’s struggling forestry companies and its hard-hit sawmilling sector need federal support to get them through to the end of this year. That’s the message of a report by UBC professor Harry Nelson entitled “Tired Iron: The State of the Harvesting Sector on the B.C. “The forestry sector has seen reduced revenues, mill closures and job losses across the That is why the BC Coalition for Forestry Reform (BCCFR) is calling on the provincial government to immediately implement the recommended changes to forestry regulation and governance. The crash of lumber prices, the pandemic-related halt to the North American economy, combined with the pain felt by softwood lumber tariffs over the last two years has many industry players facing a “brutal” next couple of financial quarters, said Derek Nighbor, president-CEO of the Forest Products Association of Canada (FPAC). Nighbor called sawmills the “heartbeat” of a highly integrated sector that feeds pulp and paper mills. “If the government proposed a sliding scale where, let’s say, a 50 per cent subsidy would kick in at a 15-20 per cent revenue decline, for example, I know that would help keep more people working.”. Copyright © Canada Wide Media Limited. With log yards full coming out of the winter harvest, Nighbor said an improved wage subsidy program would go a long way toward being able to process those inventories. In recent weeks, lumber markets have plunged with a nearly 40 per cent drop in prices, causing the temporary closure of 39 sawmills across Canada, including 24 in British Columbia. For many forestry players operating on the margins, being hit with a 30 per cent revenue drip would be “too late for some.”. Forestry is a major industry in most of Canada's provinces. Consumers have gotten a crash course in the importance of forestry when faced with toilet paper shortages (a 241 per cent jump in demand for producers this spring), the scarcity of sanitary wipes, and in learning how essential pulp is for the manufacture of protective masks and hospital gowns. There’s a lot of passion in this industry. The American forestry industry faces multiple large-scale challenges that threaten to erode recent gains and must address them to ensure future success. 7 x 10, 416p, 2 figures, 2000. Given the scale of the crisis affecting Canada’s forest products industry, the House of Commons Standing Committee on Natural Resources agreed in December 2007 to undertake a review of the opportunities and challenges facing the industry. Looking ahead to next year and the post-COVID-19 recovery, prospects look considerably brighter, Nighbor said. Nighbor appeared as a witness before the House of Commons Standing Committee on Finance on April 17 to lay out the landscape of what the industry is experiencing. But B.C.’s key resource sector faces a serious problem as long-time, successful businesses are having succession problems. “If the forest industry’s leadership won’t enter the 21st … With approximately 765 million acres of woodland, America ranks among the most forested nations, according to research from the U.S. Forest Service.. Consequently, the country boasts a healthy forest Other panellists at last week’s conference pointed to the nuts and bolts of dealing with the difficulties of the “new era.” Gord Hubley, a business advisor with Meyers Norris Penny, reported on rates and returns for loggers and noted that businesses generally can expect 15 to 50 per cent return on investment. (File photo), Northern College wants to hear about your workforce needs, Reduction in U.S. softwood lumber duties doesn't appease Ottawa, Queen's Park, North Bay drone company taking a lead on responsible forest management. “Machinery is old. With the global population predicted to hit 9 billion by 2050 – and two out of every three people living in cities by 2050 – the demand for construction has never been greater. He expressed confidence that estimated $3.6-billion in softwood lumber tariffs, collected by U.S. government, will come back to Canadian producers on successful appeals through the trade tribunals. “We just need some help to keep our heads above water and keep as many people working as possible over the next few months,” he said. “I’m pleased that the Natural Resources Committee will be studying the challenges facing Canada’s forestry industry,” Melillo stated. And in the construction queue over the next 36 months, the industry has hundreds of millions of dollars in shovel-ready projects related to environmental performance improvements and on innovation side with new generation products in the bio-economy space. “The rest of 2020 is going to be about survival.”. The infrastructure of B.C.’s forest industry faces many challenges, including aging machinery and workforce, and unrealistic rate structures. Between 1990 and 2008, around 46 million acres of forest were harvested in Canada at an average of more than 2.5 million acres per year, with historic rates estimating around 65% coming from the boreal forest. Eddie LeMoine is one of Canada's leading expert on employee engagement and the impact of the aging demographics. The infrastructure of B.C.’s forest industry faces many challenges, including aging machinery and workforce, and unrealistic rate structures. B.C. He proposes more of a segmented, mill-by-mill, approach. Sign in or register for your free account, Industry association urges Ottawa for lifeline to restart sawmills and resume wood chip flow, The Forest Products Association of Canada counts 39 sawmills closed across the country, which is staunching the supply of wood chips to pulp and paper mills. Forestry has traditionally been an important part of B.C. Subscribe to our newsletter. The stoppage in wood chip production is already being felt downstream with a handful of pulp operations scheduling down time, despite their order sheets looking healthy. This resulted in an amendment to the RFA, the Tasmanian Community Forestry Agreement, increasing the reserve area by 170,000 ha and providing $150 million for more intensive forest management and industry compensation. “They can’t get the chips they need to make their in-demand products,” said Nighbor. The work hasn’t been as steady as it could be, and it’s been hard to train and retain new workers.”. 's economy. Want to read more stories about business in the North? The future of the forestry sector in Canada is facing unprecedented challenges. “We need liquidity supports now,” he said, with more risk-tolerant lending than is offered by the mainstream banks that can be quickly rolled out and not force companies to provide more security. In the forest sector, ROI has been at or less than zero for years. “. Resources | BCBusinessUBC professor Harry Nelson addresses the Truck Loggers Association. What are the major social issues of the 1970's? But the wage subsidy is “by no means a magic bullet,” he added. But with threats like pests and the end of a softwood lumber agreement with the U.S., is the industry facing trouble? A lot of willingness on the part of people to share their time and expertise. Subsidy, designed to soften the blow to employers caused by the pandemic function competitively in the industry to find. 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